MSC, Costamare Settle Claim Over 2021 Orange County Oil Spill But Shift Blame to Pipeline Operator

MSC Mediterranean Shipping Company says has settled claims with insurers related to the 2021 Orange County oil spill off Southern California after an oil pipeline was damaged by a ship’s anchor.

The settlement was reached with the subrogate insurers of Amplify Energy, which owns and operates the 17-mile San Pedro Bay Pipeline that was the source of the spill.

MSC says the settlement amount will be jointly funded by MSC and Costamare “without admission of responsibility or liability for the environmental damage that took place due to Amplify’s negligent management of their underwater pipeline.”

The settlement comes as Amplify Energy said over the weekend that it has received the necessary approvals from federal regulatory agencies to restart operations at the Beta Field offshore Southern California, following repairs to the pipeline from the 2021 incident. The company also revealed that it had received $85 million in net proceeds from the vessels that are believed to have struck the pipeline.

The pipeline breach that caused the oil spill remains under investigation, but the U.S. Coast Guard and National Transportation Safety Board (NTSB) believe the pipeline was dragged by a ship’s anchor during a storm on January 25, 2021—more than 9 months before the oil spill was discovered. The incident was never reported and the pipeline was not inspected until oil began washing up on Southern California beaches in early October 2021.

Divers then discovered that part of the pipeline had been displaced by about 100 feet on the seafloor and had a 16-inch crack located approximately 4.7 miles west of Huntington Beach. Two containerships, MSC Danit and Beijing, have been named parties of interest in the initial anchor dragging incident.

The Beijing is owned by Costamare and chartered to China’s COSCO.

The incident occurred as the San Pedro Bay anchorages were packed with ships waiting to enter the ports of Los Angeles and Long Beach amid the pandemic-induced imports surge that overwhelmed the nation’s supply chains and created an unprecedented backup off Southern California ports.

In relation to the incident, Amplify Energy pleaded guilty to criminal negligence charges last year and agreed to pay nearly $13 million in fines after it was discovered that the company continued to operate the pipeline for hours after leak alarms went off and then improperly restarted the pipeline after it had been shut down.

MSC’s statement said the company maintains that Amplify is “solely responsible for events that led up to the oil spill and that their actions further worsened the pollution substantially.”

“MSC agreed to this settlement to move forward productively, and we hope this regrettable incident will encourage Amplify to recognize its responsibility as a marine operator in the waters of California,” the statement said.

“Amplify pleaded guilty to criminal negligence for their role in the oil spill. Amplify failed to act as a responsible marine operator by not taking reasonable preventative steps to better protect its pipeline and detect deficiencies within its pipeline despite becoming aware of them for months prior to the spill. For these reasons a preventable pollution event occurred which negatively impacted San Pedro Bay,” the statement added.

Earlier this year, MSC and Costamare agreed to pay Southern California fishermen, tour companies, and property owners $45 million to settle a separate lawsuit related to the spill.

The incident remains under investigation by the U.S. Coast Guard and NTSB.